Select Committee on Environment, Transport and Regional Affairs Appendices to the Minutes of Evidence

Annex 1


  1.  The origins of Metrolink go back to the mid 1980s when the Authority carried out a review of the role of the local rail network. At the time, the situation was characterised by:

    —  a rising deficit and deteriorating performance of the services;

    —  the prospect of substantial capital investment in new rolling stock and signalling to keep the services running in the future;

    —  inability to attract more passengers to the network—especially from the car—because of the peripheral location of the main stations at the edges of central Manchester and other conurbation centres.

  2.  A wide range of options for the future of the network was considered which included:

    —  reviving plans to build a tunnel under central Manchester;

    —  conversion to LRT with a tunnel in central Manchester;

    —  conversion of the lines to LRT operation with surface links in the city centre;

    —  conversion to either a guided or an unguided busway;

    —  retaining the existing lines with further investment but no central area links;

    —  complete closure.

  3.  A cost benefit analysis of these options was carried out. This showed that both the options involving tunnelling could not be justified on cost grounds. There would have been major increases in congestion costs if the lines were closed. Interestingly, conversion to busway would have involved significant costs of both removing the rail track and platforms and in the vehicle fleet needed to provide a similar passenger capacity to a rail based system. It would also have needed a much longer closure period than conversion to Metrolink making it much more difficult to regain public trasnport patronage in the interim. Hence the whole life costs of the busway were similar to light rail.

  4.  Ultimately, the choice narrowed down to continued investment in the existing rail services to replace the rolling stock and signalling and converting them to light rail with a surface crossing of central Manchester. Of these the light rail option emerged as the better of the two in a rigorous economic appraisal required by the Department of Transport.

Phase 1

  5.  The choice of rail lines which could be converted to light rail was constrained by the necessity to ensure that they could be physically separated from the rest of the British Rail network as at the time the Railway Inspectorate would not allow joint running with conventional trains. Five existing lines and one abandoned line were identified. These included the two busiest lines in the conurbation which were those linking Manchester and Bury and Manchester and Altrincham. These were selected as the first phase of the light rail network as they were both in urgent need of capital investment and would generate the high levels of benefits needed to justify the cost of the central area section of the line.

  6.  Parliamentary powers were granted in 1988 to build these lines and Government funding was obtained in 1989 subject to the involvement of the private sector in operating the line. As part of the funding process a Design Build Operate and Maintain (DBOM) contract was agreed with DoT. Under this consortia were invited to bid for a single contract to design and build the system and to operate and maintain it for a 15 year period taking both the risks on operating costs and revenues. The contract price of the design and build element was reduced in order to recognise the benefit of the operating concession which was granted.

  7.  As this was the first venture into operating railways by the private sector, because of the perceived risks, the value of this benefit was limited to £5 million. Hence the funding was in the main by Government and the PTA with a significant contribution from European Union sources. The resulting funding package for the £150 million cost was as follows:

Passenger Transport Authority£69 million
Section 56 grant£48 million
European Investment Bank£15 million
European Regional Development Fund£13 million
Private sector£5 million

Phase 2

  8.  The first extension to Eccles via Salford Quays is now being built. The first section will open later this year and the full line in the Spring of 2000. This will serve the rapidly developing regeneration area of Salford Quays and the north side of the Manchester Ship Canal to the town of Eccles. This will radically improve public transport access to and from Salford Quays and provide a strong link between this area and the regional centre.

  9.  The tendering proces for expanding the system began in 1996 and led to a new contract award (using PFI principles) in May 1997. A new consortium (Altram, consisting of Laing, Ansaldo, Serco) won the contract to operate Phase 1, design and construct Phase 2 and then operate the full system. This meant that the previous incumbent operator's contract was terminated.

  10.  Because of the high patronage levels (and hence profitability of Phase 1), the reletting of the contract gave rise to the private sector assembling a funding package of £95 million towards the total construction costs of £160 million. The remainder of the funding came from Developer contributions of £12 million, Capital Challenge Funds of £17 million, the PTA's own cash resources of £26 million and ERDF grant of £10 million.

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